Wal-Mart (WMT) Shares Lower on First Quarter Results

Shares of Wal-Mart Stores Inc. (WMT) were off -1.97 or -2.46 percent to $77.95in Tuesday's premarket after the company announced its first quarter earnings for the company's 2016 fiscal year early this morning. The company missed analyst expectations by a penny per share. Wal-Mart stock closed at $79.92 per share, up +0.68 or +0.86 percent in Monday's regular trading session.

Bentonville, Arkansas based Wal-Mart Stores Inc. also known as Walmart, was founded by Sam Walton in 1962 and incorporated in 1969.

The company runs a total of 11,489 stores under 72 banners in 27 countries with e-commerce sites in 11 countries. Walmart is the largest company in the world by revenue and the world's largest private employer, with more than 2.2 million employees. The company is half owned by the Walton Family, which retains ownership of 50 percent of the company through the Walton Enterprises holding company. As of 2009, the company is the largest grocery dealer in the United States with 51 percent of its U.S. sales from its grocery business.

Excluding some items, Wal-Mart reported earnings of $1.03 per diluted share for the company's first fiscal quarter of 2016. This compares to earnings of $1.10 per share in the same period one year ago. Revenue was also lower, dropping to $114.83 billion compared to $114.96 billion in 2015's first quarter. Analysts were expecting the company to report earnings of $1.04 per share on revenue of $116.2 billion.

Wal-Mart reported an increase of +1.1 percent for same-store sales in the United States, its second consecutive quarterly gain. Nevertheless, same store sales missed the consensus of a +1.5 percent increase from analysts polled by the Consensus Metrix research firm.

The company reported e-commerce sales increased by about +17 percent in the quarter, but consolidated operating income declined -8.3 percent due to investments in employee wages, training and e-commerce. Also, earnings were negatively affected by currency fluctuations, which, according to Wal-Mart impacted first quarter earnings by -$0.03 per share.

Doug McMillon, President and Chief Executive Officer of Wal-Mart Stores said in the company's press release that, "We had a solid first quarter. We took some important strategic steps to strengthen the foundation of our business for the future. We need to continue to get better at consistently running great stores, clubs and e-commerce everywhere we operate...and we are."

Charles Holley, the company's Chief Financial Officer and Executive Vice President noted that, "Based on our views of the global and macro-economic environment, and assuming currency rates remain at current levels, we expect second quarter fiscal 2016 earnings per share to range between $1.06 and $1.18. Our second quarter guidance includes the impact of approximately $0.04 per share from our previously announced investments in both the U.S. associate wages and training, as well as $0.04 per share from currency.

The company's guidance for its fiscal 2016 second quarter is for earnings per share of $1.06 to $1.18 compared to last year's $1.21. Same store comparable sales for Wal-Mart U.S. stores are expected to be around +1 percent, while Sam's Club comparable sales are expected to increase +2 percent, both numbers had a flat reading last year.

Company beats estimates and raises second quarter and full year guidance.

Published on May 19, 2015

By Jay Hawk

Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.